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Question 13

“Matching optimization is about getting the most employer match given limited personal cash. A common employer formula is ‘100% match up to 4% of pay.’ That means the employer will fully match your contributions, up to 4% of your salary. Doing the math lets you see how much extra money the employer adds when you contribute the necessary percent. This quick calculation is a helpful habit: when you understand the dollar impact of meeting the match threshold, you can prioritize contributions to capture that free money before directing additional savings elsewhere.”

If you earn $50,000 and your employer matches 100% of contributions up to 4% of salary, what is the total annual contribution when you contribute 4%?

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By Wise Wallet

Diversification reduces company-specific risk but cannot eliminate overall market risk.